Abstract
The study aimed to determine whether the Goals-based Wealth Management (GBWM) framework generates superior risk-adjusted performance compared to a personalised Asset Liability Management (ALM) framework, thereby enhancing retirement savings for Black South African entrepreneurs. The research addresses a critical gap in a context where this demographic, often concentrated in the informal sector, faces systemic exclusion from formal retirement systems. Structural barriers such as low financial literacy, limited advisory access, and irregular income streams lead to sub-optimal planning, heightening the risk of old-age poverty. To achieve its objectives, the study employed a rigorous quantitative and positivist methodology. It first collected primary data via a tailored questionnaire to uncover the retirement goals and financial behaviours of Black South African entrepreneurs, using hierarchical clustering to distil the data into representative profiles. The methodology then advanced to portfolio construction, applying MVO to create Regulation 28-compliant growth, balanced, and conservative portfolios that served as a standardised investment universe. The core of the research involved the construction, calibration, and testing of the GBWM and ALM models. Both models were meticulously calibrated with identical inputs-demographic data, financial behaviours, and the constructed portfolios-and their performance was evaluated using a comprehensive suite of metrics, including goal achievement probabilities, funding ratios, and risk-adjusted measures like the Sharpe ratio, Var, and CVar.
The study's findings revealed a complex interplay between the psychological and socioeconomic realities of Black South African entrepreneurs and their approach to retirement planning. Hierarchical clustering revealed a segmented landscape of entrepreneur retirement preparedness, fundamentally opposing a one-size-fits-all approach by identifying nine distinct archetypes. Further findings revealed that optimal retirement portfolios exhibited a clear risk-return trade-off, from the high-equity growth portfolio with the best historical return and Sharpe ratio to the heavily defensive conservative portfolio with a negative Sharpe ratio. The direct comparison between the GBWM and ALM frameworks found that GBWM outperformed ALM as evidenced by its ability to generate higher returns and efficient risk-taking validating GBWM as the superior retirement savings framework.